NY Times July 21, 2011



Many Seek to Revamp Post Office

WASHINGTON — Until the deficit negotiations took center stage this summer, several members of Congress had another issue they wanted to focus on: an overhaul of the Postal Service, which is on the brink of insolvency.

“If it wasn’t for the federal debt ceiling and the budget issues, this would be a major, major issue,” said Representative Stephen F. Lynch, a Massachusetts Democrat who has proposed a bill that would overhaul the Postal Service’s pension obligations.

The Postal Service has been imploring Congress to act for years. If the status quo continues, Postmaster General Patrick R. Donahoe said Wednesday, mail delivery could be cut back to three days a week within 20 years.

Lawmakers on both sides of the aisle agree that the Postal Service needs revamping. Five overhaul bills have been introduced — two by Republicans and three by Democrats — with proposals addressing issues like  the actuarial assumptions for employees’ retirement benefits and the viability of Saturday deliveries.

“The situation at the Postal Service is dire,” said Senator Thomas R. Carper, a Delaware Democrat who has introduced one of the bills. “The option of doing nothing is not an option.”

The most likely path to passing major legislation appears to be through the Senate, where Mr. Carper, who is chairman of the committee responsible for the Post Office, and Senator Susan Collins, a Maine Republican who has introduced a different bill, are working together to draft a compromise that could pass with bipartisan support.

The Senate bill would probably grant the Postal Service much of what it wants, including the ability to tap into surpluses in its retiree benefits funds, which would maintain solvency in the short term. It could also allow the Postal Service to ship wine and beer, close more unprofitable post offices and eliminate Saturday deliveries.

“Those of us in the postal community believe that if Senator Carper’s bill can pass the Senate with some bipartisan support, there may be a chance that some legislation can be considered and voted upon in the House,” said Ruth Y. Goldway, chairwoman of the Postal Regulatory Commission, an oversight body established by Congress.

The wild card is a plan put forth by Representative Darrell Issa, chairman of the House oversight committee. He proposes letting the Postal Service default on its obligations and then establishing a regulatory body with a broad mandate to restructure the organization. The bill would also allow the elimination of Saturday deliveries, the use of postal vehicles and properties for commercial advertisements and the establishment of a commission that would operate much like the military base-closing panel in recommending closures of unprofitable post offices.

Mr. Issa, Republican of California, adamantly opposes letting the Postal Service touch the retirement fund surpluses. All of the other bills involve such a step, which Mr. Issa has described as a “multibillion-dollar bailout funded by the taxpayers.”

Representative Gerald E. Connolly, a Virginia Democrat who has proposed an overhaul bill, contested Mr. Issa’s characterization, calling the use of the word “bailout” politically charged and “disingenuous.”

“This is their money,” he said of the Postal Service.

The regulatory commission and the Office of Personnel Management, which manages the retirement funds, agree with the Postal Service’s position that it has been overpaying. Estimates of the surpluses range from $50 billion to more than $80 billion.

The popularity of Mr. Issa’s bill among House Republicans, many of whom campaigned against policies labeled as bailouts, may be the deciding factor in whether a major overhaul is approved this year. Representative Dennis Ross, the Florida Republican who heads the House oversight subcommittee that works on postal issues, is so far the only co-sponsor on Mr. Issa’s bill. He said he did not support withdrawals from the retirement funds but stopped short of calling the other proposals bailouts.

So far, 14 House Republicans and 161 Democrats are listed as co-sponsors of Mr. Lynch’s bill.

Despite cutting $12 billion in costs over the last four years and eliminating more than 200,000 career positions in the last decade, the Postal Service is expected to lose $8 billion for the second consecutive year as mail volume has dropped by about 20 percent from 2006 to 2010.

“There’s no disagreement with anyone that we will continue to reduce head count,” Mr. Donahoe, the postmaster general, said. “We will continue to do network consolidations and route consolidations.”

Last month, to keep the organization afloat, Mr. Donahoe stopped making required payments of $115 million every other week to one retirement fund. Without legislation, the Postal Service will again run out of money in the fall, and Mr. Donahoe said he would have to take more drastic steps.

For 179 years, mail delivery was managed by the Post Office Department; it was financed by tax revenue, and its leader held a cabinet-level position. In 1970, Congress reinvented the department as the United States Postal Service, an independent entity with federal oversight and an official monopoly.

The Postal Service now relies on its own revenue, although it has taken out about $12 billion in loans from the Treasury and its obligations to its employees are guaranteed by the government.

Current payment levels for the retirement funds were established by a 2006 law just before mail volume started plummeting and the work force began shrinking. Consequently, postal officials said, they face formidable burdens, such as an annual $5.5 billion check that prepays 100 percent of retiree health care liability — a prepayment required of no other federal entity.

“It’s just tied their finances in knots and made it impossible for them to respond to any new programs in the changing dynamics of the new market,” Ms. Goldway said.

Mr. Carper and Ms. Collins, who helped write the 2006 law, are meeting regularly to find a compromise. Their main dispute appears to be the issue of ending Saturday deliveries, which the Postal Service and regulatory commission say could save $1.7 billion to $3 billion a year.

Mr. Carper favors eliminating Saturday mail, while Ms. Collins said such a step could deter mailing-dependent industries from using the Postal Service, and would hurt rural Americans who have limited access to the Internet. Ms. Collins said she might support such a provision if the Postal Service could present plans to address these impacts.

Such willingness to compromise is in short supply in the House, where some representatives are now drawing a line down the center aisle over an issue once considered nonpartisan.

Mr. Lynch offered a theory as to how the line was drawn.

Because the retirement fund surpluses are now in the hands of the federal government, returning the money to the Postal Service would be listed as new government spending. And that would upset the budget-focused House majority.

“They don’t want it to show on the books,” Mr. Lynch said. “That’s where the resistance comes.”